Wills, Trusts & Estates Prof Blog

Women and Financial Advisors

After women divorce or become widowed, they tend to stop using advisors. AdvisorOne speculates this is because women can tell when an advisor is really listening to them, and usually need more education and validation than men to make financial decisions.

Eileen O’Connor is vice president of wealth management at McLean Asset Management in Virginia.  O’Connor shares some ways that advisors can keep their high net-worth women clients. First she says it is  beneficial to ask emotional questions.  Since an increasingly significant portion of the nation’s wealth is going to daughters, and 80% of women do not feel understood, a softer approach and emotional inquiries could be a good way to make those clients feel more understood.

Women are also starting to control more investable assets and only 5% of ultrahigh-net-worth clients do not use an advisor.  Within the category of high net worth women, there are four different groups, with varying needs:

• Married Women: Many of these women are concerned about health challenges, death of a spouse and divorce. 
• Working Women: 86% of women in this group were concerned that their earning power would erode or become obsolete.  Over 90% said that they would like to work with a fiduciary, but they usually use a broker instead because they do not have time to find an advisor who is the best match.
• Sandwich Generation: This is the generation providing for aging parents and children.  Caring for others is their largest concern, and many of these women are likely to drop out of the workforce to provide care to others.
• Retired Women: These women are primarily concerned about a decline in the economy and overpaying for major assets.

See Joyce Hanson, What Do Wealthy Women Want?, AdvisorOne, June 27, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Article on Children and Partners

Lynne Marie Kohn (John Brown McCarty Professor, Regent University School of Law) recently published her article entitled, The Latest Twist on the Rich Girl Dilemma: My Partner Wants My Child and My Money, 3 Estate Planning and Community Property Law Journal 1 (2011).  The abstract available on SSRN is below: 

This essay explores whether a partner may access the family fortune by virtue of parentage of a partner’s adopted child when that partner has little to no legal connection to the child (via adoption, biology, primary caregiver, or de facto parent) nor to the partner (contractual, testamentary, civil union, marriage, or registered domestic partnership) but may have some claim to assert such rights based on progressive state law. The article will discuss relevant legal issues and considers how complicated the landscape for families has become. Section I provides background as to how some state case law allows a person to access the child of his or her partner by virtue of that partnership. Section II provides classic rich girl examples of the dilemma played out in case law and gossip columns alike. Section III offers solutions for generational estate planning that may provide some assistance to dynasty families in equipping their children for leaving a legacy, rather than a muddle of partnership chaos. This article will close with suggestions for generational estate planning designed to defend a family fortune from potentially opportunistic partners. 

Every wealthy parent worries that a voracious partner will take advantage of his or her child. When that partner can claim parenthood status, his or her access to the family fortune is all the more rapacious. The latest twist on the classic rich girl dilemma is well worth this epigrammatic examination.

The Washington Animal Rescue League Offers an Estate Planning Option for Pets

The Washington Animal Rescue League has recently launched a program to assist individuals who want to provide for pets in their estate plans.

Here is an excerpt from their website:

Many of us worry about what might happen to our companion animals should we become unable to care for them.  We may not know anyone who is willing and able to provide a good alternative home for our beloved canine and feline family members.

Now, the Washington Animal Rescue League’s Guardian Angels program can help by finding new caretakers for the pets of donors who are either incapacitated or deceased. 

Our mission is always to help dogs and cats with nowhere else to go—and we are delighted to care for your animals in the event that they need assistance, as well. Donations to the Guardian Angels will support our many sheltering, adoption and veterinary care programs.

All of the information you need is available here in this brochure, and at www.warl.org/GuardianAngels.

Assisted Suicide

Assisted Suicide is probably one of the most controversial topics facing our country this day, and the law regulating assisted suicide reflects this aspect. After the Supreme Court's decision in 1997, the laws surrounding assisted suicide exist in only a few states including Oregon, Washington, and Montana. The Supreme Court found that there is no right to physician assisted suicide. There are laws in Oregon and Washington that allow a doctor to prescribe a lethal dose of medication, but it is quite specific and there are certain steps that must be taken. In Montana, the the law is less clear. Here is a list of all the states with and without assisted suicide laws.

See Is Assisted Suicide Legal?, ElderLaw Answers, June 18, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention. 

Texas Estate Planning Case Law Update

Gerry W. Beyer (Governor Preston E. Smith Regents Professor of Law, Texas Tech University School of Law) has recently posted on SSRN his article entitled Texas Estate Planning Case Law Update.

Here is the abstract of the article:

This article discusses recent judicial developments relating to the Texas law of intestacy, wills, estate administration, trusts, and other estate planning matters. The discussion of each case concludes with a moral, i.e., the important lesson to be learned from the case. By recognizing situations that have led to time consuming and costly litigation in the past, estate planners can reduce the likelihood of the same situations arising with their clients.

World's Oldest Billionaire Dies

Walter Haefner died on June 19 at the age of 101 as the world's oldest billionaire. According to Forbes magazine, Haefner's net worth at the time of his death was about $4.3 billion.

Like most successful people, Haefner's life was unique and fulfilling. He began his career as a entrepreneur in World War II selling wood-gas-powered cars. In 1945, he founded his company Amg Automobil und Motoren AG, a Swiss Car Dealership. This company would eventually grow to become Switzerland's largest car dealership. In the 1960s he started a computer services firm. In the 1976 and 1978, he purchased a stake in two separate computer companies. In 1978 he purchased a stake in Islandia, a company that manufactures software for computers, and in 1976 he purchased a stake in Wyly, a computer services business. This is particularly strange considering that Haefner remained computer illiterate most of his life. 

See Carolyn Bandel, Walter Haefner, World's Oldest Billionaire, Dies at 101, Bloomberg, June 27, 2012.

Special thanks to Peter Parlapiano for bringing this article to my attention.

Transferee Liability on Gift Tax

As I have previously discussed, Anna Nicole Smith's estate dispute left its mark on estate planning. Now it appears that we might have some more to learn from her late husband, J. Howard Marshall II. In the mid-90s, Marshall sold some of the shares that he owned in his company back to the company itself. This increased the value of all the stocks, including those held by his children. The IRS determined that this was a gift and a taxable event; therefore, the IRS determined that his estate that owed a tax on that transfer with interest on the tax. The beneficiaries of the estate did pay the full amount, and argued that it ended their liability under I.R.C. § 6234(b) and that § 6901 does not establish further liablity. The Government argued that § 6234(a)(2)4 does establish independent liablity. There arguments were based upon two conflicting cases in the federal court of appeals.

The court in United States v. Robert S. MacIntyre et al. stated that while § 6234(b) imposes liablity it limits it to the amount of the gift that was received by the party. In addition, the court also concluded that it should end the donee's liablity in this case, but still noted that § 6901 does allow the Government to receive interest on the gift.

See Robert L. Moshman, Transferee Liability for Gift Tax, The Estate Analyst, June 2012.

Virginia Trust Law Adopts Decanting Law and Trust Protectors

In the past year, the State of Virigina adopted a law that allows for the trusts with a decanting provision. Decanting powers gives the trustee the authority to transfer all principal and income interest from one trust to a different but a similar trust. The trust where the interested is transferred to becomes the new trust. Virginia is one of only 15 states that allow this type of trust provision. This type of provision is generally used to get around the problem of not being able to change an irrevocable trust. The trustee is allowed to create a new trust that is in the "spirit" of the old trust. This gives the trustee more flexibility and allows him or her to modernize the trust without changing the original purpose of the old trust.

In addition, Virginia passed another law to protect the interests of trustee. Now, the state has a law that states that if a trustee follows the direction of a trust protector, then that would shield the trustee from liability. In other words, the trustee cannot be held liable for any bad act he or she commits if that person committed them at the direction of the trust protector. 

See Scott Zucker, 2012 Changes in VIrginia Trust Law (Part 2): Decanting & Directed Trusts, The Zucker Law Firm PLLC, June 22, 2012.

Reminder: CLE on Estate Planning, Elder Law, and Guardianships

Just a reminder that the University of Texas will be hosting its 14^th annual CLE entitled, Estate Planning, Guardianship and Elder Law Conference. The CLE will be August 8 – 10 at Moody Gardens Hotel in Galveston. The conference will provide 14.5 Credit hours, and 3 Ethics Hours. Information on the CLE is provided here.

The Supreme Court Upholds the ACA

On Thursday, June 28, the Supreme Court of the United States handed down its ruling on the Affordable Care Act or Obamacare. In Nation Federation of Independent Business et al. v. Sebelius, Secretary of Health and Human Services, et al., the Court upheld the law's individual mandate as a valid use of the tax and spend clause. In addition, the new law imposes a 3.8% Medicare surtax on unearned income. Here is a chart that helps explain the new surtax. Furthermore, Mr. Robert S. Keebler will host a one-hour webinar on July 30, 2012 entitled, "Understanding the 3.8% Medicare Surtax."

See Robert S. Keebler, Health Care, Email, June 28, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.